It was once easy for states to free themselves of the burden of debt. French kings could improve their finances by executing their creditors — a primitive but widespread form of debt restructuring. International law deprived debtors of this option, and worsened matters by imposing the principle of continuity of obligation. Lawyers use the Latin phrase pacta sunt servanda (agreements must be kept), which has recently been expressed, variously, in moralistic terms, “Greece has an ethical duty to repay its debt” (France’s Front National); in school playground terms, “Greece has to pay; that’s the rule” (Benoît Cœuré, member of the executive board of the European Central Bank); and regardless of popular sentiment, “Elections change nothing” (Wolfgang Schäuble, German finance minister).

Greece’s debt is nearly €320bn ($364bn); since 2009, it has risen by 50% relative to Greece’s wealth creation. According to the Financial Times, “to service its debt burden would require Greece to operate as a quasi slave economy.” But the rule won’t bend to accommodate the arithmetic. “A debt is a debt,” said Christine Lagarde, director of the International Monetary Fund. It doesn’t matter whether Greece can pay or not — it must pay.

The pacta sunt servanda doctrine is not immutable. A UN Conference on Trade and Development (UNCTAD) discussion paper says: “The international law obligation to repay debt has never been accepted as absolute, and has been frequently limited or qualified”. There are legal arguments to justify suspension of repayment, or even the cancellation of all or part of a country’s debt: debts have been described as “odious” (contracted by a dictatorial regime). “illegitimate” (contracted without regard for the general public interest), or contracted without the consent of the people. Article 103 of the UN charter says that in “a conflict between the obligations of the Members... under the present charter and their obligations under any other (...)

(6) Quoted by Richard Gott in Cuba: a New History, Yale University Press, 2005.

(7) Anaïs Tamen, “La doctrine de la dette “odieuse” ou l’utilisation du droit international dans les rapports de puissance” (The doctrine of “odious” debt, or the use of international law in power relationships), paper presented at the 3rd CADTM conference on international law, Amsterdam, 11 December 2003.

(8) Russian bonds bought by many French savers and redeemed for $400m in 1996, following an agreement between France and Russia.